ITC gains 4% after March quarter results; most brokerages maintain ‘buy’

Truman Slate

Shares of ITC, the diversified conglomerate, attained as a lot as 4 for every cent to Rs 203 apiece on the BSE on Monday following the company on Friday documented a seven.75 for every cent drop in its income right before tax (PBT) at Rs 4,743.forty seven crore for the quarter ended March 31. The fall in PBT was due to a sharp decrease in use, specially in rural locations due to the Covid-19 pandemic.

The company posted a 4.ninety three for every cent decrease in its income from functions at Rs 12,560.64 crore throughout the quarter.

ITC’s net income, however, rose nine.18 for every cent to Rs three,926.seventy two crore, owing to tax adjustments pursuing the reduction in company tax costs previous year. Click Here TO Go through Whole REPORT

At 09:25 am, the stock was buying and selling around one.seven for every cent increased at Rs 198.50. In comparison, the benchmark S&P BSE Sensex was ruling .nine for every cent decrease at 34,854 levels.

The company knowledgeable that the board has advised dividend of Rs 10.15 for every share for the for the year ended March 31, 2020. Full cash outflow in this regard will be Rs 12,476.sixty one crores.

ITC mentioned that in the initial phases, the pandemic had a sizeable effects on its hotels, instruction, and stationery solutions corporations as it coincided with the peak interval and the onset of the school time, which were being closed owing to the pandemic.

What brokerages say

ICICI Securities notes that even though cigarette revenue have returned to the former levels on a day-to-day revenue foundation by mid-June following the lockdown was little by little lifted in most states, it thinks ITC would have misplaced forty-45 times of revenue in Q1FY21. “FMCG enterprise noticed a two.8 for every cent revenue dip throughout the quarter with source chain & producing disruption in the previous 10-15 times of March 2020. Nonetheless, the enterprise is possible to witness sharp growth in Q1FY21 given most of the merchandise portfolio is composed of essentials (packaged foods & soaps),” it mentioned in a final result assessment report issued on June 27.

The growth in packaged food items is possible to be a silver lining in FY21E, the brokerage added. It has maintained “Get” score on the stock with the target price of Rs 250.

Worldwide brokerage Jefferies has also maintained “Get” score on the stock with the target price of Rs 240. The brokerage expects ITC’s FMCG enterprise will do effectively even though Hotels, paperboard and Agri segments would be underneath pressure. Cigarette enterprise is on-course to hit pre-Covid-19 levels, although Q1FY21 can be a washout, it mentioned.

Analysts at Prabhudas Lilladher expect a tepid recovery in Hotels enterprise for the future few of quarters with losses in 1H due to low occupancy and increased preset price tag enterprise.

“We think ITC would be 1 of the key beneficiaries of an uptick in FMCG demand from customers and is inching toward double-digit EBIDTA margins around the future two-three years. ITC trades at 14.4xFY22 earnings for every share (EPS), almost 60 for every cent low cost to our protection universe with a five for every cent dividend yield (80% payout), and 8.nine for every cent PBT CAGR around FY20-22.

It maintains a “Get” with a target price of Rs 251 on sum of the sections investigation (SOTP) (valuing cigarette enterprise at 15xFY22 EPS).

Edelweiss Securities, on the other hand, has a “Maintain” score on the stock with the target price of Rs 220. “Although the cigarette possibility in India continues to be eye-catching given for every capita use at one/18th of China’s, investing modalities have modified with Environmental, Social and Governance (ESG) assuming a far more sizeable function,” the brokerage mentioned in its scores rationale.

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